When entrepreneurs in Colorado look to find funding to grow a business, they may look toward two options — venture capital and private equity. Many people with startup companies have great ideas or underlying technologies but need more funding in order to move into full production or elevate their work to the next level. As a result, they may approach various types of investors to play a role in moving the company forward.
Private equity firms are involved in a variety of projects but most often work with more established firms with ongoing revenue. In some cases, these might be businesses that are looking for new management or opportunities. Many private equity firms are best known for fully buying out target companies or at least taking a majority share in publicly traded stocks. Rather than funds that allow a startup founder to continue to run the company with more resources, private equity firms offer solutions for people looking to sell their businesses and move on.
On the other hand, venture capital firms are designed to provide important capital by taking an equity share of a promising company in the early stages of its development. These firms may get involved in different stages of a company’s funding lifecycle. In most cases, venture capital firms do not seek to take over companies or buy a majority share. They want to reap the financial benefits of investing in a successful startup rather than redirecting its management or focus.
Still other business owners may look toward individual angel investors to provide even earlier funding in the process of developing a firm. In all cases, a business and commercial law attorney can help a company develop a strategic plan and key documents to appeal to these potential backers.